While playing the game earlier, I replaced one of my Medium Tasset (the leggings) with a Setite Shendyt. The result was that the Shendyt ended up looking like the Medium Tasset. Very odd. But I died and DC'd from the server before I could test anything else.
Here's a screenshot: http://i.imgur.com/T6xxEUd.jpg
However, it happened again, this time with the Medium Armor (top piece) getting replaced with the Setite top piece. At first I thought this was great, because I could have the armor of the Medium but the look of the Setite.
But this was not the case. It actually takes on the full attribute of the Setite armor, it just has the icon, name, and model of the Medium Armor.
Here's another screenshot: http://i.imgur.com/XDp5b70.jpg
I went ahead and removed it, placed it in a box, dropped it, traded it to someone else, and confirmed that they saw the bug too, both on my character and when they picked up the item (and the stats as well).
The strangest part was when I equipped the original Setite armor. It had no model, no stats, but kept the icon and name. When I dropped it, the loot bag was empty.
tl;dr It seems as though when you swap your armor directly, it has a chance of the new armor overriding the other one, taking on it's name and icon. The original armor is destroyed.